SETTLEMENT AGREEMENT

PARTIES

This S~ttlement Agreement ("Agreement") is made between the

United States of America, acting through the Department of

Justice (the "Department of Justice"), and on behalf of the

Office of Inspector General ("OIG-HHS") of the Department

Health and Human Services ("HHS") ; the TRICA/{E Management

Activity ("TMA") (formerly the Office of the Civilian Health

Medical Program Of the Uniformed Services ("OCHAMPUS")), through

its General Counsel; the United States Office of Personnel

Management ("OPM"), which administers the Federal Employees

Health Benefits Program ("FEHBP") (collectively, the "United

States"); the Personal Representative ~f the Estate of Relator

Theresa Semtner ("Relator"); and Associated Emergency Physicians

Medical Group ("Associated"); (collectively in all,

"Parties"), through their authorized representatives.

II. PREA}CBLE

WHEREAS:

A. The United States contends that Associated submitted or

caused to be submitted claims for payment to the Medicare Program

("Medicare"), Title XVIII of the Social Security Act, 42 U.S.C.

§§ 1395-1395ggg (1997), the TRIC31RE Program, i0 U.S.C. §§ 1071­

1106; the FEHBP, 5 U.S.C. §§ 8901-8914, and the Medicaid Program,

Associated Emergency PhysiciansMedical GroupSettlement agreement 1

42 U.S.Co §§ 1396-1396v (1997).

B. This Agreement addresses the United States’ civil and

adminishrative claims, as set forth in Paragraphs C and D of the

Agreement, against Associated based on the conduct alleged in the

sealed action pending in the Western District of Oklahoma (the

"Sealed Action") involving the coding by Emergency Physicians

Billing Service "EPBS") of emergency room services on behalf of

Associated through September 24, 1999 (the "Covered Conduct").

C. The United States contends that the Covered Conduct has

resulted in the submission of claims that are actionable under

the False Claims Act, 31 U.S.C. §§ 3729-3733, and common law.

D. The United States also contends that it has certain

administrative claims against Associated under the provisions for

pe~Tnissive exclusion from the Medicare, Medicaid and other

Federal health care programs, 42 U.S.C. § 1320a-7(b), the

provisions for exclusion from the TRICA_RE program, 32 C.F.R.

§ 199.9, the provisions for exclusion from the FEHBP, 5 U.S.C.

§ 8902a or 5 CoF.R. Part 970, and the provisions for civil

monetary penalties, 42 U.S.C. § 1320a-7a, for the Covered

Conduct.

E. Associated contests and disputes the contentions of

the United States.

F. The Parties mutually desire to settle these disputes,

recognizing the costs and risks of litigation.

Associated Emergency Physicians Medical Group Settlement a~re~ment 2

The Parties agree that no provision of this Agreement,

nor any consideration exchanged pursuant to this Agreement,

constitutes~-any admission by any person or entity with respect to

any issue of law or fact.

III. TERMS AND CONDITIONS

NOW, THEREFORE, in reliance on the representations contained

herein and in consideration of the mutual promises, covenants,

and obligations set forth below, and for good and valuable

consideration as stated herein, the Parties agree as follows:

Associated agrees to pay the United States and the

state of Californ±a (the "State") the collective sum of

$161,046.03 (the "Total Amount"). Associated agrees to make

separate payments aggregating up to the Total Amount as follows:

$130,947.05 to the United States (the "United States’ Settlement

Share") and $30,098.98 to the State (the "State’s Settlement

Share"). Payment of the United States’ Settlement Share will be

made within ten business days of execution of the Agreement.

Payment of the United States’ Settlement Share shall be governed

by this Agreement, and payment will be made by electronic funds

transfer in accordance with instructions to be provided by the

United States. A separate settlement agreement will be

negotiated and executed between Associated and the State (the

"State Agreement"), with payment instructions as to the State’s

Associated Emergency Phys±ciansMedical GroupSettlement agreement 3

Settlement Share to be provided by Ellyn Sternfield, Esq. on

behalf of the State. The TMA has or will process claims that

have been s~spended by TMA ~, with the amount to be paid by TMA to

Associated to equal 88% of /he a~ount that would have been p~id

by TMA had it processed the suspended claims without review of

the coding, and with respect to the suspended claims, for claims

for care prior to fiscal year 1999, TMA has or will waive

application of edits concerning deductibles, third party

liability and other health insurance, and will process based on

1998 profiles.

TMA has or may further adjust its payments to implement the

provisions of the above paragraph for ady of the suspended claims

that were inadvertently processed prior to the effective date of

this Agreement. Further, Associated waives any administrative

appeal rights for any of the suspended claims. For suspended TMA

claims submitted by EPBS on behalf of Associated, payments will

be issued in the normal course of business which means the

payment will normally be issued to EPBS.

2. Corporate Inteqrity A~reement. Associated has provided

a certification, attached hereto as Exhibit A, that it has not

furnished services under any Federal health care program (as

defined in 42 U.S.C. § 1320a-7b(f)) since March i, 2000, and that

it has no plans to resume furnishing services. Associated

Associated Emergency PhysiciansMedical Group

Settlement agreement 4

recognizes that if within the next three years, it furnishes

services under any Federal health care program, it will be

subject" to ~ertain integrity obligations required by the HHS-OIG.

Associated represents that ~t will immediately contact the H~S­

OIG in the event it furnishes services under any Federal health

care program within the next three years.

3. Dismissal and Release. Subject to the exceptions in

Paragraph 8 below, in consideration of the obligations set forth

in this Agreement and conditioned upon Associated’s payment in

full of the United States’ Settlement Share: (i) within five days

after the Relator~s receipt of the payment set forth in Paragraph

6 hereof, the United States and Relator wili move to dismiss with

prejudice the claims against Associated in the Sealed Action

subject to the terms of this Agreement and as described more

fully in Paragraph 9 of this Agreement; and (ii) the United

States hereby releases and discharges Associated and all of its

current or former shareholders, officers, directors, employees,

partners, physician contractors, subsidiaries, predecessors,

successors, affiliates and assigns (collectively, the

"Releasees") from any civil or administrative monetary claims,

including recoupment claims, the United States now has or may

have under the False Claims Act, 31 U.S.C. §§ 3729-3733, the

Civil Monetary Penalties Law, 42 U.S.C. 1320a-7a, the Program

Fraud Civil Remedies Act, 31 U.S.C. §§ 3801-3B12, the Social

Associated Emergency PhysioiansMedical GroupSettlement agreement 5

at 42 U.S.C. § 13951(e), or the common law theories

by mistake, unjust enrichment, breach of contract, and

~he Covered Conduct.

~<Iministrative Waiv-~r. -(a) Subjec~ to the exceptions

. 7, below and as reserved in this Subparagraph, in~ ......

for the obligations of Associated under this

conditioned upon Associated’s payment in full of the

~es’ Settlement Share and the State’s Settlement Share,

~grees tO release and refrain from instituting,

maintaining any administrative claim or any action

~ ~r~u:.ssive exclusion of any Releasees from the Medicare,

,~ >ther Federal health care programs (as defined in 42

¯ .... ..... o=-7b(f)) pursuant to 42 U.S.C. § 1320a-7a (Civil

~:~.~aities Law) , or 42 U.S.C. § 1320a-7 (b) (permissive

or the Covered Conduct. The OIG-HHS expressly

rights to comply with any statutory obligations to

’~sociated from the Medicare, Medicaid or other

care programs under 42 U.S.C. § 1320a-7(a)

<~txclusion) for the Covered Conduct. Nothing in this

,/~tecludes OIG-HHS from taking action against entities

or for conduct and practices, for which civil claims

~=served in Paragraph 8, below.

{ib) In consideration of the obligations of Associated

~meement, conditioned upon Associated’s payment in

t i ~9ency Physicians

6

full of the United States’ Settlement Share, the TMA agrees to

refrain from instituting, directing, or maintaining any

administrative claims or any action seeking exclusion from the

TRICARE Program against any-Rele~sees under 32 C.F.R~ § 199.9 for

the Covered Conduct, except as reserved in Paragraph 8 below and

as reserved in this Subparagraph° The TMA expressly reserves

authority to exclude any Releasees from the TRICARE program under

32 C.F.R. §§ 199.9(f) (i) (i) (A) and (f) (I) (iii),

Covered Conduct. Nothing in this Subparagraph precludes the TMA

from taking action against entities or persons, or for conduct

and practices, for which civil claims have been reserved in

Paragraph 8, below.

(c) In consideration of the obligations of Associated set

forth in this Agreement, conditioned upon Associated’s payment in

full of the United States’ Settlement Share, OPM agrees to

release and refrain from instituting, directing, or maintaining

any administrative claim or any action seeking exclusion from the

FEHBP against any Releasees under 5 U.S.C. § 8902a or 5 C.F.R.

Part 970 for the Covered Conduct, except if excluded by the OIG­

HHS pursuant to 42 U.S.C. § 1320a-7(a). Nothing in this

Subparagraph precludes OPM from taking action against entities or

persons, or for conduct and practices, for which civil claims

have been reserved in Paragraph 8, below.

5. Relator agrees that the settlement between the United

Associated Emergency PhysiciansMedical GroupSettlement agreement 7

States and Associated in this action is fair, adequate and

reasonable pursuant to 31 U.S.Co § 3730(c) (2)

6. ~ Pursuant to 31 U.S.C. § 3730, the United States will

pay to Relator a share of 2~% (t~e "Relator’s share"i, within

reasonable time after the United States’ receipt of the United

States’ Settlement Share from Associated. Relator will provide

the United States with wire transfer information to allow the

Relator’s share to be paid by wire transfer. The United States

shall not be obligated to pay Relator unless and until the United

States receives payment of the United States’ Settlement Share

from Associated.

7~ In exchange for the United States’ payment to Relator

of the Relator’s share, Relator hereby releases and discharges

any and all claims Relator might bring against the United States

relating to the Covered Conduct, and this Agreement, under 31

U.S.C. § 3730(d).

8. ExceDtions to the Releases. Notwithstanding any term

of this Agreement, specifically reserved and excluded from the

scope and terms of this Agreement and the releases provided

herein are:

a. any civil, criminal, or administrative claims

that may arise under Title 26, United States Code (Internal

Revenue Code), or under securities laws;

Do claims for defective or deficient services, for

Associated Emergency PhysiciansM~dical GroupSettlement agreement

services not provided or for medically unnecessary services, to

the extent such claims are based On conduct other than the

CoveredConduct;

c. claims relating to obligations created by this

Agreement;

d. claims against entities or persons other than

the Releasees including those currently nam.ed as defendants in

the Sealed Action, and any named defendants in United States ex

tel. Semtner v. EPBS, No. 94-671-(C) (W.D. Okla.), and other

clients of EPBS;

e. except as explicitly stated in this Agreement, any

administrative liability to agencies other than OIG-HHS, TMA, and

OPM, including claims for any action seeking exclusion from the

Medicare program or Federal health care programs (as defined in

Tit~e 42 U.S.C. §1320a-7b(f)) pursuant to 42 U.S.C. ~ 1320a-7(a)

(mandatory exclusion);

f. any liability to the United States or its agencies

for any conduct other than the Covered Conduct; and

g. any criminal liability.

9. The consideration set forth in this Agreement is

accepted by all Parties in full compromise and settlement of the

claims and causes of action for injuries and damages asserted in

the Sealed Action pursuant and subject to the releases set forth

Associated Emergency PhysiciansMedical GroupSettlement agreement

in Paragraphs 3 and 4 and the exceptions set forth in Paragraph

8. Concurrent with the execution of this Settlement Agreement,

the unihed ~tates and Relator shall execute a stipulation of

dismissal to be filed with the Court within five days after

Relator’s receipt of the Relator’s share described in Paragraph 6

of this Agreement. The stipulation will request that the Court

enter an order to dismiss with prejudice the claims against

Associated in the Sealed Action, pursuant and subject to the

terms of this Agreement and to any order by the Court with

respect to the seal. The Parties will exert all best efforts to

obtain the dismissal with prejudice of the claims against

Associated consistent with this Agreement.

i0. In consideration of the mutual promises and obligations

of this Agreement, Relator hereby releases and discharges all

Releasees from any claims, known or unknown, which Relator

asserts or could have asserted under the False Claims Act or any

o~her statute or common law theory of any kind whatsoever

creating causes of action for the Covered Conduct, including

claims against Associated for attorneys’ fees, costs and expenses

incurred by Relator in connection With the Sealed Action or any

related litigation.

ii. Unallowable Costs. Associated agrees that all costs

(as defined in the Federal Acquisition Regulations (FAR)

Associated Emergency Physicians¯ Medical GroupSettlement agreement I0

§ 31.205-47, and in Titles XVIII and XIX of the Social Security

Act, 42 U.S.C. ~§§ 1395-1395ggg and 1396-1396v, and the

regulatlons-~promulgated thereunder) incurred by or on behalf of

Associated in connection with the following matters covered by

this Agreement and the agreement with the State: (a) attorney’s

fees; (b) the Government’s audits and civil and criminal

investigations of the allegations which are thesubject of this

Agreement; (c) any of Associated’s investigation, defense and

corrective actions (including attorney’s feesi undertaken in

response to the Government’s audits and civil and criminal

investigations in connection with matters specifically covered by

this Agreement and the agreement with the State; (d) the

negotiation of this Agreement, including the agreement with the

State (including attorney’s fees); and (e) the-payments made

the United States, the State and the Relator pursuant to this

Agreement and the agreement:with the State, are unallowable costs

on Government contracts and under the Medicare, Medicaid,

TRICARE, Veterans Affairs (VA) and FEHBP Programs (hereinafter

"unallowable costs"). These unallowable costs will be separately

estimated and accounted for by Associated and Associated will not

charge such unallowable costs directly or indirectly to any

contracts with the United States or any state Medicaid program,

or seek payment for such unallowable costs through any cost

report, cost statement, information statement or payment request

Associated Emergency PhysiciansMedical GroupSettlement agreement ii

submitted by Associated or any of its subsidiaries to the

Medicare, Medicaid, TRICARJ~, VA or FEHBP programs.

Associated further agrees that, if Associated currently is

participating in, or previously has participated, or becomes,a

participant in the Federal health care programs (as defined in 42

U.S.C. § 1320a-7b(f)) as a provider that is reimbhrsed in whole

or in part on the basis of the provider’s costs, or if Associated

has or acquires an ownership interest in such an entity, within

60 days of the effective date of this Agreement, Associated will

identify to applicable Medicare and TRICARE fiscal

intermediaries, carriers and/or contractors, and Medicaid and

FEHBP fiscal agents, any unallowable costs (as defined in this

Paragraph II) included in payments previously sought from the

United States, or any State Medicaid Program, including, but not

limited toj payments sought in any cost reports, cost statements,

information reports, or payment requests already submitted by

Associated or any of its subsidiaries, and will request, and

agree, that such cost reports, cost statements, information

reports or payment requests, even if already settled, be adjusted

to account for the effect of the inclusion of the unallowable

costs. Associated agrees that the United States will be entitled

to recoup from Associated any overpayment as a result of the

inclusion of such unallowable costs on previously-submitted cost

reports, information reports, cost statements or requests for

Associated Emergency PhysiciansMedical GroupSettlement agreement 12

payments due after the adjustments have been made

i ~id to the United States pursuant to the direction of

of Justice, and/or the affected agencies. The

.... ~,_~ reserves its rights to disagree with any

submitted by Associated or any of its subsidiaries

~ . . ~ ~ c5 of inclusion of unallowable costs (as defined in

....... : .... Associated or any of its subsidiaries’ cost...... -~-~

~<~’t statements or information reports. Nothing in this

i ll constitute a waiver of the rights of the United

~~amine or reexamine the Unallowable costs described in

~ksequent to the execution of this Agreement,

~re6s that it will not seek pa~ent for any of the

billings related .to the Covered Conduct from any

care beneficiaries or their parents 0r sponsors.

~ ~ives any causes of action against these

or their parents or sponsors based upon the claims

overed by this Agreement.

of Double JeoDardy Defense. Associated waives

assert any defenses Associated may have to any

< ::-ecution or administrative action relating to the

[, which defenses may be based.in whole or in part

that, ~der the Double Jeopardy Clause in the

13

Fifth Amendment of the Constitution, or under the Excessive Fines

Clause in the Eighth Amendment of the Constitution, this

Settl~m~nt bars a remedy sought in such criminal prosecution or

administrative action. Associated agrees that this settlement is

not punitive in purpose or effect.

14. Nothing in this Paragraph or any other provision of

this Agreement constitutes an agreement by the United States

concerning the characterization of the amounts paid hereunder for

purposes of the Internal Revenue Code, Title 26 of the United

States Code.

15. Associated represents that this Agreement is freely and

voluntarily entered into without duress or compulsion.

16. Venue for Enforcement, InterDretation or DisPute

Resolution. Should any action to enforce or interpr~6 this

Agreement, or to resolve any dispute hereunder be required, the

Parties acknowledge the jurisdiction of the federal courts and

agree that venue for any such action shall be in the United

States District Court for the Western District of Oklahoma.

17. Entire A~reement. This Agreement constitutes the

entire agreement between the Parties with respect to the matters

contained herein, and may not be modified except by a writing

signed by all Parties hereto.

18. Counter]3arts. This Agreement may be executed in

counterparts, each of which constitutes an o~iginal and all of

Associated Emergency PhysiciansMedical GroupSettlement agreement 14

i~ute one and the same agreement.

~indinq Nature of Aqreement. This Agreement is binding

’ essors, heirs, assigns and transferees of the Parties.

~.ffective Date. This Agreement is effective on the

~-~ature of the last signatory to the Agreement.

IINITED STATES OF AMERICA

REBECCA ROHRTrial AttorneyCommercial Litigation BranchCivil DivisionUnited States Department of Justice,

Dated:LEWIS MORRISAssistant Inspector General,Office of Counsel to theInspector GeneralOffice of Inspector GeneralUnited States Department ofHealth and Human Services

Dated:ROBERT L. SHEPHERDDeputy General CounselTRICARE Management ActivityUnited States Department of Defense

which constitute one and the same agreement.

!9-. B<ndina Nature of Aareemenn. This Agreemen~ is binding

on all successors, heirs, assigns and transferees of the Parties.

20. Effective Date. This Agreement is effective on the

da~e of signature of the last signatory to 1:he Agreemenn.

UNITED STATES OF AMERICA

Dated:REBECCA ROHRTrial AttorneyCommercial Litigation BranchCivil DivisionUnited States Depar~men~ of Justice,

LEWIS M6RRIS /Assistan~ InspecK¢,r General,Office of Counsel to theinspector GeneralOffice of Inspector GeneralUnited SKates D~parnment ofHealth and Human Services

Dated:

ROBERT L. SHEPHERDDeputy General CounselTRIC.A2.E Management ActivityUnited States Department of Defense

A~sociated Emergency PhysiciansM@d~cal GroupSe~lemen~ asreemen~ 15

~/i0/02 TIIU 14:27 FA~ 3036763618 TRICARE Mfi~T ACT-GEN CON ~]oo4

which constitute one and the same agreement.

19. Bindinq Nature of A~reement. This Agreement is binding

on all successors, heirs, assigns and transferees of the Parties

20. Effective Date. This Agreement is effective on th~

date of signature of the last signatory to the Agreement.

UNITED STATES OF AMERICA

Dated:REBECCA ROHRTrial AttorneyCommercial Litigation BranchCivil DivisionUnited States Department of Justice,

Dated:LEWIS MORRISAssistant Inspector General,Office of Counsel to theInspector Generaloffice of Inspector GeneralUnited States Department ofHealth and Human Services

K~b~-~. ~ .... H~D//~z~ ~.Deputy General CounselTRICARE Management ActivityUnited States Department of Defense

Associated Emergency PhysiciansMedical GroupSettlement agreemen~

Assistant Inspector General for LegalAffairs

Office of the Inspector GeneralUnited States Office of Personnel~Management

~_BBY L~ BLOCKAssistant Director for InsuranceProgramsUnited States Office of PersonnelManagement

RELATOR

Dated:CHERYL A. VAUGKTVaught & Conner, P.L.L.C.Attorneys for Relator

Associated Emergency Physicians MedicalGroup

Dated:

Richard Stennes, M.D.President

Physicians

16

Dated:

E. JEREMY HUTTON Assistant Inspector General for Legal Affairs Office of the Inspector General United States Office of PersonnelMan~gemWn~

Dated:

ABBY L. BLOCKAssistant Director for InsuranceProgramsUnited S~ates Office of PersonnelManagemen~

RELATOR

CHERYL A.~AUGHT 0Vaught & Conner, P.L.L.C.Attorneys for ~elator

Associated Emergency Physicians MedicalGroup

Dated:Richard Stennes, M.D.president

Deputy Genera/.

United States D~pe~T_mcn~ of

DaZed:

Assistan~ ~n~pector ~ forAZZairs

States Office of

15